Finding highly valued customers is an important objective of any business in order to improve upon a company's profitability. Not only do companies wish to acquire highly valued customers, it is equally important to identify, retain and conduct additional business with their existing highly valued customers. There has long been a need for customer value models as a critical component in the field of customer relationship management. When the most profitable or highly valued customers to a company have been identified by a customer value model, several models such as retention, acquisition, or growth models can be developed that target these highly valued customers. There are no such known customer value models in the airline industry of which the applicant is aware.
Typically, a customer's value is measured by the profitability or net revenue contribution (which is revenue less cost). Though this trend has been observed in many industries, it may not be true in the airline industry where customers who contribute higher net revenue are not necessarily the most frequent fliers. This will be illustrated with an example of two customers, one of whom flies internationally once a year with high fares for vacation, and the other flies more often within the United States for business. The first customer with the international vacation travel will generate more net revenue than the second customer, despite the fact that the latter flies much more frequently. However, the second customer could be more valuable to the airline because this customer is more likely to fly often and generate more revenue in the near future than the first customer, who may generate more revenue now but less in the future. Therefore, developers of an accurate customer value model in the airline industry should not ignore the number of flights taken by each customer in a given evaluation period.
Another factor to be considered when determining a customer's value is the miles flown. Mileage is known to be proportional to the number of flights, and can be presented by, or combined with, the number of flights factor.